Dodgy?
Liam,
I didn't mean to imply that I thought his proposals
were dodgy in the illegal sense. I just meant that
it sounded like a very convoluted arrangement.
My company must set up a separate trust to manage
the pension, and then set up a separate company
to carry out any borowing, that's a whole lot of
obfuscation that I'd rather do without.
It may be legal but I just think it's kind of messy.
Also, Revenue specifically rule out the idea of the trust
investing back into the company which established it.
It's hardly too much of a leap to infer that a company
which is owned by the same people should also be
ruled out. Perhaps there's a loophole here but it's
pretty obvious that the spirit if not the letter of the
law is that this sort of thing shouldn't be done.
I'm curious though. Can the financial institutions
leverage the funds that customers pay into pension
plans. Is there a reason why the rules should be different?
I know the idea of investing in property through a company has been discussed and I think the general
consensus is that it shouldn't be done, but...
Doesn't the lower rates of Corporation Tax as compared with income tax allow you to build up a Lump sum
much quicker (by paying yourself a low salary and letting
the rest build up in the company).
The company can then use this lump sum to invest,
and can borrow to acquire properties (unlike a self administered pension trust).
As long as you can get to a point where the income from investments exceeds that salary you are taking out
you can retire. E.g. A handfull of rental properties with
mortgages cleared should be enough.
Sure, you go on paying income tax on the salary
you draw down, but you'd have to do that anyway if
you owned the properties in your own name and were
collecting the rents directly.
Can someone point out the problem with this
reasoning?
-Rd